New Owner and Existing Business - Case Study Example

Case Study ONE: New Owner, Existing Business James T. White (2009) writes that it is usually less risky to buy an existing business than start a business from scratch. This is exactly what Anna took into consideration while making this buying decision. The existing salon business was on sale because the styles it offered were getting out of fashion and due to some economic challenges, the survival was getting out of question. Anna was confident of her entrepreneurial abilities and knew that with her efforts and vision, she would be able to restructure the business and take it to a level way better than before. Although Anna was happy that this bargain will save her the costs of setting up a new business, legal proceedings, location, customers and suppliers but what she did not take into consideration were the risks and challenges of buying a business that is losing its pace. It is difficult to revive the image of a business that is already declining especially in relation to the customers who have switched to a better designer as well as suppliers who are enjoying better relationship with others in the industry. Anna should have also considered the fact that obtaining loyalty and adaptability from existing business’s employees is a challenge. The financial and economic side of the existing business could pose threat because before buying Anna did not examine the details of the mentioned and trusted only on her abilities. Moreover, Anna should have given a deep look into the history of the existing business dealings with the stakeholders and ensured its good reputation. 2) It is believed that if a person has strong dreams and the ability and motivation to turn them into reality, no hurdle can suppress his powers. Same applies to entrepreneurs. It is a common trait of entrepreneurs that with their vision and constant enthusiasm, they can take a business to high levels of success. S Anil Kumar, S.C.Poornima, Mini K.Abraham, K.Jayashree (2003) states that entrepreneurs are intuitive and highly motivated from inside, they have strong will and determination to achieve their goals. Shane Greenstein (2011) says that entrepreneurs are visionary, exceptionally energetic and have strong will power. They know what their weaknesses are and ways to get over them. Anna bought the existing business because she knew that her powerful ideas and efforts could really make this business a big hit in the market despite of the fact that she had not had good managerial skills. Anna did not let this weakness of her come in the way of her success. She knew that soft skills could be learned at any point in life but the characteristics of being visionary and enthusiastic are permanently embedded in her personality and nothing can beat them. Due to the lack of managerial background, Anna had difficulties in setting up a course of direction for her business and redefining the clientele. She was unaware of the necessary marketing skills needed to flourish the business and also her knowledge on finances and forecasting was limited. In order to overcome these challenges, Anna took help from professionals in management and marketing. The specialists help her clarify the missions and goals of the business; presented to her practical and proven marketing and advertisement ideas which could bring her cash and; most importantly assisted her in the financial planning and forecasting of sales and revenues. After implementing the management strategies learned from professionals, Anna is glad at the improving financial status. She is satisfied with her trained employees and content that marketing efforts have persuaded customers to prefer dealing with Anna’s businesses over others in the town. Case Study TWO – Mac Tools franchise 1) Franchising, according to Justin Gooderl Longenecker, Carlos W. Moore, Leslie E. Palich, J. William Petty (2005) is an agreement between two parties whereby one party usually the franchisee has the responsibility of selling or promoting the products and services of the franchisor as per the rules, requirements and conditions laid down by the franchisor. John considers franchising as the best business option for entrepreneurs because of a number of reasons. Franchising eliminates many risks that an independent business brings along. For instance, when franchising, there is complete support from the franchisor regarding the reputation and growth of the business so that brings quite less chances of failure. When starting up an independent business, a lot of costs including the set up costs, advertising costs, distribution costs and above all the cost of failure are involved which are minimized with franchising. Another fruitful advantage of franchising is that the franchisor offers training to the franchisee and team on every aspect of the product and services and offers them full support in this area. This not only makes the franchisee familiar of the company’s operation but also improves the managerial and other soft skills needed to carry out the business smoothly. A significant advantage of franchising is that the franchisee does not have to work hard of building a brand image and reputation in the industry. He has the right to make the most of the established reputation of the franchisor. 2) It is a common misconception that acquisition of a franchise alone can guarantee success. Franchising is basically one of the ways to run a small business or sometimes it is also used as a method for business expansion. Some franchisees’ assume that by purchasing a franchise, they are going to get profits without putting even a little amount of effort but in practice such assumptions are usually greeted by failure. This is because results are not produced without efforts and hard work. Joe Mathews, Don DeBolt, Deb Perciva (2011) states that franchising is just a method that assists new or existing entrepreneurs run a business without going through the legal, financial and marketing procedures that are involved with starting up of any business from scratch. The fact is that a lot of responsibility lies on franchises because franchises have to ensure through their performance and customer dealings that they are running exactly on the same values as laid down by the franchisor. If a franchise is unable to meet the expectation scale already established by the franchisor, it not only fails to keep its promise but also leaves a rotten mark on the image of the parent brand. This can cost heavy fines and even termination of franchising contract. When John was running the franchise of Mac Tools, he did not solely rely on the reputation of the brand to fill his pockets. He puts in a lot of hard work and effort in running the business smoothly and believes that when regular and reliable products and services are offered to customer on consistent basis, then there is no chance of failing. John also has support from his spouse which keeps him going. John makes the most of the training he has acquired by Mac Tools and is known as the best distributor of the product in England. For his determination and focus, he has won the awards of the top performer of the year and the best franchisee of the year. 3) If I were to start my own business, I would wish it to be a small business with around fifty employees because small business is easy to manage and legal regulations are not complicated. I would like my business to be a franchise because from what I have learned in this course is that franchising is a better business option based on a number of valid reasons. Firstly, franchising as we know is a legal agreement between two entities in which the franchisor gives the right to the franchisee to market its products and services in the way it wants. It is more like a symbiotic relationship in which both parties get equal benefits. The franchisor increases its market presence and gets the opportunity to improve as well as strengthen its reputation and revenues. On the other hand, the franchisee finds it easy to run a franchise because the initial set up costs are eliminated and efforts needed to attract customers are minimized because the brand already has a reputation and customer base. Secondly, franchising also eliminates or minimizes the costs of advertisement and market research because the brand has an established presence and no further awareness needs to be injected among the customers. Thirdly, major financial and operating help comes from the franchisor because it is his brand name and image that the franchisee will be promoting. Fourthly, before a franchise is opened, the franchisee obtains training from the franchisor about the brand and its operations in much detail. This training not only helps him understand the ins and outs of conducting the business on the core philosophical grounds of the franchisor but also polishes the personal and managerial skills of the franchisee. I would like to start up a fast food franchise in my area preferably Pizza Hut because I know how well the brand is established in the industry. By putting in hard work, keeping strong business focus and offering customers the kind of service, ambience and taste they expect from Pizza Hut, the franchise would certainly be a success. References James T. White (2009). James T. Whites Million Dollar Business Bible. Indiana: AuthorHouse . 4-35. Joe Mathews, Don DeBolt, Deb Perciva (2011). Street Smart Franchising: A Must Read Before You Buy a Franchise. 2nd ed. Entrepreneur Press. 1-22. Justin Gooderl Longenecker, Carlos W. Moore, Leslie E. Palich, J. William Petty (2006). Small Business Management: An Entrepreneurial Emphasis, Volume 1. 13th ed. Ohio: South-Western. 73-79. S Anil Kumar, S.C.Poornima, Mini K.Abraham, K.Jayashree (2003). Entrepreneurship Development. New Delhi: New Age International. 1-4. Shane Greenstein. (2011). Steve Jobs and the Economics of One Entrepreneur. Micro, IEEE. 31 (6), 64-65. (Reference taken from e-library) Read More